International Trade Impacts

How Are US Sanctions on Russian Oil Disrupting Global Trade? A Tale of Two Countries New US sanctions targeting Russia’s oil supply chain are reshaping maritime trade flows—hitting China with delays while driving a surge in Indian port activity. 📉 China: A 29% Drop in Russian Oil Shipments In late January 2025, China saw only 163 unique vessel port calls, far below the expected 230. This sharp decline is due to: - New US Sanctions (Jan 10): Many Chinese ports are avoiding sanctioned Russian oil tankers, leading to weeks-long delays at major ports like Tianjin and Qingdao. Freight rates for non-sanctioned tankers have also spiked as demand shifts. - Severe Port Congestion: The pre-Lunar New Year rush and fears of future US tariffs have quadrupled wait times at ports like Yantian, with some trucks stuck for over 24 hours. The impact? With fewer Russian oil tankers unloading, Shandong refineries face potential losses of up to 1M barrels per day in crude supply. 📈 India: A 39% Surge in Russian Oil Arrivals Meanwhile, India is experiencing the opposite trend. From Jan 24-31, 74 tankers carrying Russian oil made port calls—a 39% jump from the expected 53. What’s driving the surge? - A race to unload Russian oil before the Feb 27 deadline, after which new sanctions restrict discharges. - Freight rates soaring, with costs for Russian oil shipments from the Baltic to India jumping from $4.9M to $6M per shipment. - Indian refiners securing supply now while seeking alternative sources for the long term. Bigger Picture: This isn’t just a short-term shift—sanctions are actively reshaping global energy supply chains. China is slowing down, India is accelerating, and freight markets are feeling the squeeze. Sources: https://lnkd.in/eYFSU-6F , https://lnkd.in/ej9b5z4q

The US is readying to get tougher to push Russia to end its war in Ukraine by way of a “second stage” of sanctions. If the US extends secondary sanctions to India for buying Russian oil, the first-order effects will show up as higher tariffs and trade friction (100-200% tariff, as proposed). The second-order effects will be on banking and finance restrictions, shipping and insurance hurdles that could do more damage by undermining India’s export competitiveness. The pain is going to be uneven though: labour-intensive, low-margin sectors like textiles, gems & jewellery and parts of engineering are highly exposed to tariff shocks, while services (IT/BPO) may prove more resilient but face payment-system risks. If a second-stage sanction goes ahead with coordinated action with EU/Japan, tighter financial restrictions would amplify impact by: - Trade finance and dollar clearing might get tougher - Market alternatives will shrink as allied economies might join in - Trigger capital outflows- raising borrowing costs A 50% tariff will hurt export volumes, but a second-stage sanction will choke both markets and money flow. Hope normalcy prevails soon. #trade #tariffs #tradefinance

Since russia’s full-scale invasion of Ukraine in 2022, European exports to Kyrgyzstan have skyrocketed. On paper, it looks like Kyrgyzstan suddenly became a booming market. In reality, most of those goods were simply being re-routed to russia. Because russia cannot import directly from European countries due to sanctions, it has switched to intermediaries — countries like Kyrgyzstan, Armenia, and Kazakhstan. This is precisely why secondary sanctions are so important. Without them, sanctions become loopholes rather than real pressure. Right now, the only European countries that seem to fully understand this are Poland and Germany, which have been pushing hardest for tightening the net. If Europe is serious about weakening russia’s war machine, it must cut off not only direct trade—but also these back channels.

"The US is warning allies that China has stepped up its support for Russia, including by providing geospatial intelligence, to help Moscow in its war against Ukraine. Amid signs of continued military integration between the two nations, China has provided Russia with satellite imagery for military purposes, as well as microelectronics and machine tools for tanks, according to people familiar with the matter. China’s support also includes optics, propellants to be used in missiles and increased space cooperation, one of the people said. President Joe Biden raised concerns with Xi Jinping during their call this week about China’s support for the Russian defense industrial base, including machine tools, optics, nitrocellulose, microelectronics, and turbojet engines, White House National Security Council spokesperson Adrienne Watson said. Trade between the two countries reached a record $240 billion in 2023. Russia’s neighbor has become the supplier of everything from clothes to machinery and cars after an exodus of Western manufacturers and multiple rounds of sanctions. At the same time, Russia has boosted exports of commodities such as coal and oil to China. Crucially, China and Hong Kong have also become key gateways for Moscow to access restricted technologies, including chips and integrated circuits, used in weapons or needed to build them. The US and European Union have listed several Chinese firms for enabling those transfers, but the trade shows little sign of dropping off. China’s foreign ministry didn’t immediately respond to a request for comment during a holiday weekend. Beijing has sought to portray itself as mostly neutral in the face of Russia’s full-scale invasion of Ukraine, now into its third year, yet it’s established a deep alliance with Moscow as part of what Xi and Vladimir Putin termed a “no limits” friendship ahead of the 2022 Winter Olympic Games in Beijing. China’s support for Russia has deepened in recent months, said the people, who spoke on condition of anonymity to discuss private matters. Secretary of State Antony Blinken briefed European allies this week on the scope and significance of China’s support and on the need to do more to curtail it, one of the people said. Blinken asked allies to raise the problem directly with China and to take actions against Chinese entities and companies, another person familiar with the discussions said. The US and its allies will be looking to convey their concerns to Beijing and to ramp up efforts to crack down on China’s support for Russia’s defense industry, the people said. Treasury Secretary Janet Yellen also warned of “significant consequences” this week if companies, including those in China, were found to provide material support for Russia’s war against Ukraine and its military-industrial base."

Trade wars don’t create wins. The U.S. just imposed a 50% tariff on Indian imports targeting $48.2B in goods. Why? Because India kept buying oil from Russia. Here’s the impact: • 25% base tariff • Another 25% punishment tariff • Total: 50% on Indian exports What does this mean? • Textiles, gems, leather, food, and automobiles will see profits squeezed • Labor-intensive Indian industries will face layoffs • U.S. buyers will pay more or pull out • Supply chains will fracture This move isn't hitting governments. It's hitting jobs. We’re watching two of the world’s largest democracies walk back years of trade momentum over foreign policy disagreements. And it raises important questions: • Should trade be used as a weapon? • Do these penalties shift behavior or deepen divides? • Who actually suffers from governments or workers? Global trade is no longer predictable. And if you're building a business across borders, you need to prepare for decisions like this. Tariffs. Geopolitics. Sanctions. Alliances. They change fast, and they change everything. Stay aware. Every export has a story. Every policy comes with a cost.

What’s the cost of going around sanctions? A thoughtful research by CEPII offers some food for thought in this regard. First, while the primary goal of sanctions is to prevent the supply of particular goods, the indirect effect is to make those goods more difficult and expensive to obtain from non-sanctioning jurisdictions. As noted in the research, more than 20% of the sanctioned products are dual-use items with both civilian and military applications. These are the core of items that russia desperately needs for continue supporting its war machine. Sanctions themselves do not mean that russia is completely blocked from accessing these dual-use items, but instead results in higher prices of imports and or lower quality of products. Findings in research point that: ▶️ Between the first and second quarter of 2022, the price index of russian imports jumped by 15.7%, breaking a long period of moderate growth. ▶️russian import prices have increased by 13% on average since the beginning of the war. This increase was higher for non-sanctioning origin (+22%) than for other origins. The increase in unit values was particularly striking for the list of strategic products (+122%); ▶️The cost of transportation and insurance has particularly increased for strategic goods exported by non-sanctioning countries (+53% ); ▶️37% of sanctioned products (33% of non-sanctioned products) are fully compensated, while this proportion rises to 73% for strategic products. On the end note, even if China has become the main supplier of dual use and advanced technology items to russia, in general, as noted in research, sanctions achieved their indirect effect and have made supplies of strategic goods more difficult and more expensive to obtain, and of lower quality. Access research here: https://lnkd.in/dRndrtPV #sanctions #trade

The EU is considering following US and UK suit in going after financial institutions that facilitate battlefield product flow to Russia. If implemented, pressure exerted from all three jurisdictions could make a difference. The changes would focus on Western subsidiaries in third countries rather than on transit countries. The EU's sanctions diplomacy has made strides to cut down on circumvention via Central Asia after multiple diplomatic visits to Kazakhstan, Uzbekistan, Armenia and others. However, a more difficult challenge is posed when stemming similar flows in southeast Asia where countries are producers, not merely transit stations. EU sanctions envoy David O’Sullivan: "A lot of the product going through China [to Russia] is coming from subsidiaries of western companies in south-east Asia. We are focusing our efforts more on trying to stop the transshipment from there through to China.” If adopted, it will be another example of the EU's measures with extraterritorial effects, a paradigm shift by EU standards. https://lnkd.in/eHcemWfD

The first signs are emerging that fresh Western sanctions on Rosneft and Lukoil are curbing exports and leaving some Russian cargoes stranded as government refineries in India pause purchases, based on Windward analysis. Last week we identified at least two blacklisted tankers carrying 1.4 million barrels of Russian crude that were anchor outside the port of Mundra, India. Sierra Leone-flagged Kusto (IMO 9308833) and Ailana (IMO 9232888) had been waiting since October 30 and October 25 respectively, Windward analysis found last week. Then on November 5, Ailana transferred its cargo via STS to another sanctioned tanker, Fortis (IMO 9395379) and that ship is now sailing for Ningbo, China, based on its AIS signals. After waiting from October 30 to November 4, Kusto has also sailed away from India, arriving at Duqm, Oman Nov 7. Tracking showed the tanker met with a tug on Nov. 3, but its AIS then showed a draft change to indicate it was no longer laden, even though no other tanker was seen via AIS taking on any transfer. The delays, potential subterfuge and transfers are one of many market signals that a sanctions shakeout for Russian oil is under way after the EU, UK, and US all imposed penalties designed to cut crude exports last month, reversing a long-held policy of nearly three years. Game-changing US sanctions on the two largest oil producers Rosneft and Lukoil announced by the Office of Foreign Asset Control (OFAC) on October 22 affect nearly half of Russian exports, with licenses allowing wind downs expiring November 21. The UK had sanctioned Rosneft and Lukoil a week earlier, leaving the G7 oil price cap imposed in December 2022 largely irrelevant, triggering oil price spikes. The cap aims for Russian oil to flow while reducing income to the Kremlin. These measures now restrict crude exports for the first time. In the past two weeks, some refiners in India and China, the biggest purchasers of Russian crude, paused or signaled they will reduce purchases, likely behind the Kusto and Ailana delays. Any wider impact hinges on whether the US follows through with enforcement after November 21. The EU’s 19th sanctions package followed a day after the shock OFAC sanctions on Rosneft and Lukoil. The combined impact of UK, EU, and US actions helped lift freight rates to a five-year high last week, as oil-on-water numbers remained at a record, amid increased dark activity and nascent changes to the fleet composition of tankers calling at Russian oil export ports. Very large crude carrier rates surpassed $125,000 daily on Middle East Gulf routes, according to shipbrokers, as Indian and Chinese buyers sought alternative cargoes to avoid Russian sanctions, and OPEC+ producers relaxed production curbs alongside a seasonal winter oil demand uplift. https://lnkd.in/eZmpz2im

📢 Sanctions and Supply Chains: The Growing Impact on Russian Trade and Logistics In recent months, sanctions have further tightened around Russia, affecting its trade, transport, and financial stability in profound ways. Here are three major developments that underscore the increasing isolation and economic strain: 🔸 Money Transfer Delays The processing times for Russian money transfers via Kazakh banks have surged by 24%, now taking around a month for payment completion. This delay impacts not only transit goods but even direct sales to Kazakhstan from Russia. Banks are concerned about reputational risks and the possibility of facing sanctions themselves. Russian companies have long used neighboring financial systems to facilitate international payments, but those avenues are narrowing. 🔸 Targeting the “Shadow Fleet” The European Union is considering new sanctions that could disrupt Russia’s oil exports through a “shadow fleet” of tankers. The European Parliament may soon mandate sanctions inspections and satellite monitoring, which would allow authorities to seize or halt tankers moving through European waters. With Europe’s Baltic and Black seas being key routes for Russian oil exports, these measures could severely impact Russian oil transit and exports. 🔸 Airline Bankruptcy Risk As reported by Russian media, about 30 Russian airlines—handling roughly 26% of domestic traffic—are at risk of bankruptcy in 2025. Mounting lease payments for Western aircraft, particularly Airbus A320s, create an unsustainable financial burden. Although Russian authorities are allowing companies to write off debts, a new 25% tax on these amounts could worsen their financial stability, potentially leading to closures. Each of these developments underscores the increasing strain sanctions are placing on Russia’s economic arteries, impacting logistics, trade, and finance on multiple fronts. As these trends evolve, businesses engaged in global logistics and supply chains should remain vigilant and adaptable.